Innovation summary

Depression and unhappiness disproportionately burden low-income populations both within and across populations. Poverty is often marked by a state of chronic stress in addition to other negative psychological outcomes, including greater feelings of meaninglessness, loneliness, and lower levels of trust and intrinsic motivation.1 Cash transfers have been thoroughly and rigorously shown to reduce poverty and improve psychological wellbeing, in regions like Kenya where the average recipient lives on just 65 cents (nominal) per day.2

The randomized control trial investigates the use of a cash-transfer program amongst low-income households in Western Kenya to determine the causal association between poverty reduction and psychological well-being.

The innovation content for the RCT consists of cash transfers distributed to a group of low-income households by the GiveDirectly program. The approach aims to reduce poverty and poor psychological well-being, including stress, unhappiness, and depression through cash transfers.

Impact summary

990 baseline households, 1361 end line households randomized into three treatment arms (treatment – receiving a cash transfer, spillover control – those not receiving a cash transfer in villages where other households do receive, pure control – those not receiving a cash transfer in villages where no other households receive a transfer)

Cash transfers increased psychological well-being of recipients and their families in addition to a 0.99 point reduction in scores of the CESD depression, all measured by psychological questionnaires

Households given an average transfer size of $717 USD

"In 2011, 503 households, received an “unconditional cash transfer” to spend as they wished. Many made major life changes, such as purchasing tin roofs and livestock. Recipient households experienced improved mental health, notably reporting less stress, depressive symptoms, and intimate partner violence and greater happiness and optimism."

Innovation details

Target: Using publicly available data to determine extremely poor communities, field staff go to households to collect data on poverty and enroll recipients.

Audit. A set of independent checks determine recipient eligibility.

Transfer: An estimated $1,000 is transferred to households (around one year’s total household consumption), using electronic payment systems. Recipients receive an SMS alert to collect cash from a mobile money agent.

Monitor: The organization monitors receipt of funds and flags any issues.

In an effort to investigate the causality between poverty and psychological well-being, this randomized control trial focuses on a direct cash transfer intervention amongst low-income households in Western Kenya where the average recipient lives on just 65 cents per day.2 Cash transfers have been thoroughly and rigorously shown to reduce poverty and improve lives and have arguably the strongest existing evidence base among anti-poverty tools.2

Treatment group: Low-income households, as determine by GiveDirectly eligibility criteria, in Western Kenya receiving direct cash transfers in the amount of $404-1525 USD.

Spillover control group: Low-income households, as determine by GiveDirectly eligibility criteria, in Western Kenya not receiving the intervention and residing in villages where other households received the treatment

Pure control group: Low-income households, as determine by GiveDirectly eligibility criteria, in Western Kenya not receiving the intervention and not residing in villages where other households received the treatment.

Along with other financial outcome measure, an index of psychological wellbeing was assessed and included a CES-D depression questionnaire, cortisol levels, and measures of optimism, self-esteem, life satisfaction, worries, perceived stress, loneliness, trust, locus of control, and happiness.

Key drivers

Use of a successful and established program

The RCT utilized the program GiveDirectly which manages cash transfers from funders end-to-end using electronic monitoring and payment technology within low-income populations in Western Kenya. Additionally, m-Pesa a mobile phone-based money transfer service, allowed for recipients to receive cash transfers directly so that no third party was involved.

Continuation

The GiveDirectly cash transfer program has been designed, implemented, and evaluated in East Africa and continues to gain funding support from various partnering organizations. The organization collaborates with third-party independently funded researchers to measure its impact in low-income communities in Kenya and Uganda. The organization plans to scale up in these regions and hopes to expand to other geographies with extremely poor populations.

Cost of implementation

Each cash transfer to a recipient was between $404-$1525 USD for an average of $717 USD. GiveDirectly has a 9% overhead, giving 91 cents for every dollar donated directly to the recipient. The organization continues to be funded by partners and various donors.

Impact details

Impact of the RCT

Improvement of psychological well-being

The average score on the CES-D depression questionnaire was 26.5 in this population, above the clinical cut-off point for depression of 16 established in Western populations. The impact of the initiative resulted in improvements in this measure: recipients scored one point lower on the depression scale than non-recipients, and also showed improvement on several other measures of psychological wellbeing, such as perceived stress, life satisfaction, happiness, and optimism. Greater psychological effects were found amongst households that were given large ($1,500) compared to small transfers ($404). Cash transfers proved an increase in psychological well-being of recipients and their families. Un- conditional cash transfers lead to a 0.18 SD increase in happiness, a 0.15 SD increase in life satisfaction, a 0.14 SD reduction in stress, and a 0.99 point reduction in scores of the CESD depression, all measured by psychological questionnaires. Amongst households that received large transfers, researchers found a reduction in cortisol levels, which were captured in log units and therefore not as readily interpretable. In households that received large transfers compared to small transfers, female-recipient compared to male-recipient households, and transfers delivered in a lump-sum compared to in monthly installments.

Female empowerment

A greater improvement in psychological well-being was found in households where females received cash transfers, compared to when transfers went to men. Female empowerment may partly account for these observed differences between female- and male-recipient households: female empowerment, as measured in part by the absence of physical and sexual violence against women, was improved in the treatment group, and particularly in female recipient households. In the cross-section, female empowerment is a strong predictor of psychological well-being.

Future Research

The results of the RCT suggest that future research is needed to determine whether addressing mental health directly through a psychological intervention, or addressing a root cause of poor mental health—financial strain—is most cost-effective for improving mental health. Additionally, future research should aim to determine whether enhancing psychological wellbeing in turn might have positive effects on household wealth. Ideally the study should be duplicated in other populations.

Long term effects of implementation

A long term evaluation of the program has been conducted in 2015 and the results will be released in 2016.